Your Macro newsfeed is ruining your Macro analysis [SGIM #5]

John, what's an opinion commonly heard in the industry that you disagree with? One

thing that is on my mind quite a lot, and especially now with how every time someone meets me for the first time, it's, oh, you're an economist.

What a great time to be an economist.

Like, there's so much chaos in the world.

And really, that's been true basically my entire career, right? It was GFC.

It was Brexit and all the chaos in Europe.

It was COVID.

It's never not been true.

But people tend to view often macro developments almost as entirely political.

And I think partly that's

the news media's fault because that's their natural lens as they report.

But I think people aren't sophisticated enough at separating fundamental kind of macro-driven cyclical and structural processes from what the politicians are doing.

And you get this bleed over where you're trying to attribute all this macro stuff often to policy and to presidential decisions and presidential priorities, what have you, when actually often those are responding to a macro situation that already exists.

Which is not to say a politician can't change the world very quickly.

They can.

They can invade a country, for instance, as we're seeing, or decide to put a blockade in place or whatever.

So it doesn't matter.

But I would separate those like big kind of risk events that politicians can drive from the general equilibrium flow that the economy tends to be in, of which policy is just one input.

And a huge number of factors are driving that all the time.

So that's one thing I'd say is we need to step away from a little bit.

And the more you do that, I think the more balanced open outlook you can develop.

Right, because I think that's exactly what we're trying to do collectively with the example of war in Iran.

We're trying to say, oh, is it solved? Is it not solved? This seems to have a huge impact, though.

But you're saying that we should understand this as part of a broader cycle?

Yeah, look, I think these types of very big things where, you know, there's a very clear political decision to make, which will affect things.